By Darrin Barnett Tuesday 20 January 2015

Photo: Joe Hockey's problem is that everyone believes he wants to do away with Medicare. (AAP: Nikki Short)

After a horror week for the Government on Medicare, why has Joe Hockey still dug in on moves to cut health spending and encourage a co-payment? Darrin Barnett writes.

It has yet to celebrate its second anniversary, but already the Abbott Government has entered piñata mode. The media now senses any ministerial appearance is a chance to smack the MP in question around until another gaffe, exaggeration, backflip, or titbit of leadership tension drops out.

In his first media appearance for a month, Treasurer Joe Hockey yesterday managed to drop the lollies in a remarkable interview with 3AW's Neil Mitchell in Melbourne.

It would be fun to watch aside from the nagging fact that the livelihood of the nation depends on these men and women for leadership and direction.

Tony Abbott is fresh from a week from hell after he was forced to backflip on plans to reduce the Medicare rebate for short consultations by $20, less than 24 hours after he personally endorsed the plan.

The PM reportedly feared a backlash from his front bench, which was understandable given the anger from doctors and the community.

But rather than walk away from the policy, the Treasurer yesterday dug in on moves to cut health spending and encourage a co-payment - seen by many to be a dismantling of Medicare by stealth.

The Government still intends to push ahead with a plan to cut the rebate paid to GPs by $5 from July and is yet to explain how the health system will cope with cuts announced in the last budget. Hockey said:

The fact we are living longer is great news. It's kind of remarkable that somewhere in the world today, it's highly probable that a child is being born that is going to live to 150. That's a long time.

The question is how do we live with dignity. How do we ensure we have a good quality of life the whole way through? This is the conversation we are going to be having with the Australian people over the next few months.

It's a bizarre response.

Bill Shorten, ever ready with a zinger, described Mr Hockey's comment as his "Sarah Palin moment".

Hockey's problem is that the conversation he has had over the past few months means everyone believes he wants to do away with Medicare.

Does he really expect doctors, health sector workers, and the general public won't mobilise again?

It makes you wonder who the Treasurer is listening to, although we get a clue elsewhere in the interview. He told 3AW:

When Australians spend the first six months of the year working for the government with tax rates nearly 50 cents in the dollar, it's a disincentive.

It's an argument he has run before and one that has been discredited before.

Hockey said last year that "higher income households pay half their income in tax" - this claim was spectacularly shot down.

The Australia Institute found that "no one is paying half their income in tax. In making this claim, Mr Hockey has confused marginal tax rates with average tax rates."

The 2 per cent Medicare levy and the 2 per cent budget repair brings the marginal tax rate for high income earners to 49 cents in the dollar - but this is only on earnings above $180,000.

In fact, someone earning $82,000 per year pays 25 per cent of their income in tax, while someone earning $291,000 pays 39 per cent of their income in tax.

Notably, Hockey did nothing to put the lid on information leaked over the weekend that placed him in a more favourable light than the prime minister.

He refused to deny a report in the News Ltd tabloids that he and former health minister Peter Dutton opposed the $20 cut to Medicare rebates in a meeting of the Expenditure Review Committee before the original plan was announced.

"I'm not going to engage in a discussion on gossip," Hockey said of the report.

Unfortunately for Mr Hockey, the main gossip today seems to be whether he and the Prime Minister are up to the job.

And the major beneficiary of the shenanigans over the past week?

Well, Julie Bishop managed to surface prominently by losing an earring yesterday.

She may well be hoping to find it at The Lodge.

Darrin Barnett is a former Canberra Press Gallery journalist and press secretary to prime minister Julia Gillard. He is now a fellow of the McKell Institute.

Hockey walks a fine line on Medicare changes - The Drum (Australian Broadcasting Corporation)